Administration’s Overtime Regulations Could Cost Millions of Workers Lost Flexibility, Benefits, Wages and Jobs

The Biden administration is trying to hike the threshold under which hourly wage work regulations apply by about $25,000 per year. The proposed overtime rule threatens to throw millions of workers out of their salaried jobs and into hourly work, leading to lost flexibility and autonomy, benefit and wage cuts, and job losses.

The Fair Labor Standards Act requires that hourly employees be paid 1.5 times their usual rate for any hours worked over 40 in a given week. Employees who receive regular salaries regardless of the hours they work are exempt from overtime requirements so long as they pass a duties test and are paid a minimum salary level. (Certain occupations like teachers and lawyers are exempt altogether).

If the rule is finalized, employers who have salaried employees earning between the current threshold of $684 per week ($35,568 per year) and the proposed threshold of $1,158 per week ($60,209 per year) will have to decide whether they will convert them to hourly workers, trade salary increases for benefit cuts or eliminate their jobs. According to data from the Bureau of Labor Statistics, 12.3 million workers fall in this range.

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